December 02, 2010

"A LEGAL PASSAGE TO INDIA: As Corporations and Law Firms Offshore Work to India, the Legal Outsourcing Industry is Gearing Up for a Boom"

That's the title of yet another major article on offshore legal outsourcing. This one is by T.V. Mahalingam and Rahul Sachitanand in the latest issue of Business Today, India's leading business magazine. The article includes a round-up of quotes from LPO companies UnitedLex, Cobra Legal Solutions, Pangea3, Mindcrest, and SDD Global Solutions, as well as the legal process outsourcing units of IT/BPO companies Infosys, Wipro, WNS, and Cognizant. The article also features facts and figures, such as these:

Number of English-speaking lawyers "churned out" each year in India: 80,000

Average hourly billing rates of Indian LPO attorneys: $25-40

Average hourly billing rates of U.S. law firm attorneys: $250-350

Average hourly billing rates of U.S. freelance contract attorneys: $50-100

Here are a few excerpts from the article:

Consider these numbers: "A document review in a New York law firm will cost $75-80 per hour; in Ohio, it would be $40-50; in India, we do the same for $11-12," says Sakthivel Venkatraman, Managing Director for India Operations at Cobra. It is hardly surprising then that 85% of all legal process outsourcing vendors, whether primarily or exclusively, deliver services in India, even though most of them are headquartered in the US.

* * *

And the size of the Indian industry? "A billion dollars," proclaimed Sanjay Kamlani, Co-CEO of Pangea3, at an industry conference held in Noida in November. It was a number that not everybody agreed with. "Perhaps $400 million is more like it, if we were to look at just pure-play LPO work done out of India. Perhaps if you included back-office work too, then it could be a billion dollars," says Ganesh Natarajan, President and CEO of Chicago-headquartered Mindcrest. Kamlani, though, says his estimate of a billion dollars includes the captives of American corporations like Honeywell and Citigroup, which do legal work out of India.

* * *

Sceptics might argue that the recent boom in the LPO industry is short-lived and can be attributed to the global recession. They argue that as bankruptcies and litigation went through the roof, Indian LPOs got a chunk of the huge legal work.... But industry folk like Natarajan and Kamlani believe a structural shift of sorts is happening and that business is at a possible inflection point in terms of growth.

"Earlier, LPOs were getting most of their business from the legal departments of companies that wanted to reduce costs," says Natarajan. "However, since the recession, we are seeing more law firms talking to LPOs," he adds. It is a point of view echoed by SDD Global's Russell Smith: "Law firms too, are increasing their involvement with LPOs, but mostly at the insistence of their corporate clients," he says.

Also, courtesy of the recession, American law firms are being asked by clients to bid for business on a fixed-fee basis, rather than on hourly bills. That has forced law firms to cut costs, and in turn, to engage LPOs.

* * *

Another sign of the maturity of the industry is the nature of the work that LPOs are undertaking and the increasing depth of the client relationships. Gurgaon-based UnitedLex began with patent support and contract management but has expanded to document review, trademarks support, and legal research.

UnitedLex CEO Daniel Reed says companies such as SDD Global and the one he heads are also trying to move the LPO industry beyond the lift-and-shift business model. "Clients are now approaching us to help them redesign their overall contracting function and provide technology and process design support," says Reed.

Click here to read the full article, which includes the added benefit of an amusing photo of yours truly, who arguably made a mistake by agreeing to stand on his head in the yoga posture shirshasana, succumbing to outright begging by the Business Today photographer.

Comments

You can follow this conversation by subscribing to the comment feed for this post.